EUR/USD Extends Its Decline, Reaches New Low
The euro is falling against the US dollar for the second day in a row, as the dollar continues to strengthen. This follows a long weekend in the US. The euro had been recovering ground from a five-year low of 1.0340 hit mid-May amid growing speculation that the European Central Bank wouldstart hiking rates in July to fight inflation but this recent pullback suggests that this trend may not continue.
However, the manufacturing PMI in the United States increased to 56.1 in May, beating estimates of 54.5. The emphasis of investors now shifts to the nonfarm payrolls report, which will be released on Friday.
In terms of technical analysis, the EUR/USD has a modest bullish bias on the daily charts, with indications remaining positive although losing momentum. The RSI has dropped, and the MACD is indicating a drop in buying interest.
The EUR/USD pair is struggling to break above a descending trendline from February highs, and has printed two red candles in a row. This suggests further downside potential, with key support levels at 1.0640 and 1.0600. If these levels are broken, the next target would be the May 20 low at 1.0532.
On the other hand, if the pair can manage to break above 1.0700, it could retest the descending trendline (currently around 1.0790) and potentially move higher from there.
